Intrinsic value of Noble Energy - NBL

Previous Close

$26.85

  Intrinsic Value

$4.77

stock screener

  Rating & Target

str. sell

-82%

Previous close

$26.85

 
Intrinsic value

$4.77

 
Up/down potential

-82%

 
Rating

str. sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of NBL stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 13.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  9.68
  25.00
  23.00
  21.20
  19.58
  18.12
  16.81
  15.63
  14.57
  13.61
  12.75
  11.97
  11.28
  10.65
  10.08
  9.58
  9.12
  8.71
  8.34
  8.00
  7.70
  7.43
  7.19
  6.97
  6.77
  6.60
  6.44
  6.29
  6.16
  6.05
  5.94
Revenue, $m
  3,491
  4,364
  5,367
  6,505
  7,779
  9,189
  10,733
  12,411
  14,219
  16,154
  18,213
  20,394
  22,693
  25,110
  27,642
  30,289
  33,050
  35,928
  38,923
  42,037
  45,275
  48,639
  52,136
  55,769
  59,546
  63,474
  67,559
  71,810
  76,235
  80,845
  85,649
Variable operating expenses, $m
 
  7,754
  9,538
  11,560
  13,823
  16,328
  19,073
  22,054
  25,267
  28,705
  32,365
  36,240
  40,326
  44,620
  49,120
  53,823
  58,731
  63,844
  69,165
  74,700
  80,453
  86,432
  92,645
  99,102
  105,814
  112,793
  120,052
  127,606
  135,470
  143,661
  152,198
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  4,787
  7,754
  9,538
  11,560
  13,823
  16,328
  19,073
  22,054
  25,267
  28,705
  32,365
  36,240
  40,326
  44,620
  49,120
  53,823
  58,731
  63,844
  69,165
  74,700
  80,453
  86,432
  92,645
  99,102
  105,814
  112,793
  120,052
  127,606
  135,470
  143,661
  152,198
Operating income, $m
  -1,296
  -3,391
  -4,170
  -5,055
  -6,044
  -7,140
  -8,340
  -9,643
  -11,048
  -12,551
  -14,152
  -15,846
  -17,633
  -19,510
  -21,478
  -23,534
  -25,680
  -27,916
  -30,243
  -32,663
  -35,178
  -37,793
  -40,509
  -43,333
  -46,268
  -49,319
  -52,493
  -55,796
  -59,235
  -62,817
  -66,549
EBITDA, $m
  1,158
  -316
  -389
  -471
  -563
  -666
  -777
  -899
  -1,030
  -1,170
  -1,319
  -1,477
  -1,644
  -1,819
  -2,002
  -2,194
  -2,394
  -2,602
  -2,819
  -3,045
  -3,279
  -3,523
  -3,776
  -4,039
  -4,313
  -4,598
  -4,893
  -5,201
  -5,522
  -5,856
  -6,204
Interest expense (income), $m
  327
  301
  427
  571
  735
  918
  1,120
  1,342
  1,583
  1,843
  2,121
  2,417
  2,730
  3,060
  3,407
  3,771
  4,151
  4,548
  4,961
  5,392
  5,839
  6,304
  6,788
  7,290
  7,812
  8,354
  8,919
  9,506
  10,116
  10,752
  11,414
Earnings before tax, $m
  -1,772
  -3,692
  -4,597
  -5,626
  -6,779
  -8,057
  -9,460
  -10,985
  -12,631
  -14,394
  -16,272
  -18,263
  -20,363
  -22,571
  -24,885
  -27,306
  -29,832
  -32,464
  -35,204
  -38,055
  -41,018
  -44,097
  -47,297
  -50,623
  -54,079
  -57,673
  -61,412
  -65,302
  -69,351
  -73,569
  -77,963
Tax expense, $m
  -787
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -998
  -3,692
  -4,597
  -5,626
  -6,779
  -8,057
  -9,460
  -10,985
  -12,631
  -14,394
  -16,272
  -18,263
  -20,363
  -22,571
  -24,885
  -27,306
  -29,832
  -32,464
  -35,204
  -38,055
  -41,018
  -44,097
  -47,297
  -50,623
  -54,079
  -57,673
  -61,412
  -65,302
  -69,351
  -73,569
  -77,963

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,180
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  21,011
  24,794
  30,497
  36,962
  44,199
  52,209
  60,985
  70,516
  80,788
  91,782
  103,483
  115,874
  128,940
  142,670
  157,057
  172,095
  187,787
  204,136
  221,151
  238,847
  257,243
  276,360
  296,226
  316,871
  338,332
  360,646
  383,856
  408,009
  433,155
  459,346
  486,641
Adjusted assets (=assets-cash), $m
  19,831
  24,794
  30,497
  36,962
  44,199
  52,209
  60,985
  70,516
  80,788
  91,782
  103,483
  115,874
  128,940
  142,670
  157,057
  172,095
  187,787
  204,136
  221,151
  238,847
  257,243
  276,360
  296,226
  316,871
  338,332
  360,646
  383,856
  408,009
  433,155
  459,346
  486,641
Revenue / Adjusted assets
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
Average production assets, $m
  19,924
  24,904
  30,632
  37,126
  44,395
  52,440
  61,255
  70,829
  81,146
  92,189
  103,942
  116,387
  129,511
  143,303
  157,753
  172,858
  188,619
  205,040
  222,131
  239,906
  258,383
  277,585
  297,539
  318,276
  339,831
  362,244
  385,557
  409,818
  435,075
  461,382
  488,798
Working capital, $m
  477
  -799
  -982
  -1,190
  -1,424
  -1,682
  -1,964
  -2,271
  -2,602
  -2,956
  -3,333
  -3,732
  -4,153
  -4,595
  -5,058
  -5,543
  -6,048
  -6,575
  -7,123
  -7,693
  -8,285
  -8,901
  -9,541
  -10,206
  -10,897
  -11,616
  -12,363
  -13,141
  -13,951
  -14,795
  -15,674
Total debt, $m
  7,074
  9,930
  13,283
  17,085
  21,340
  26,050
  31,210
  36,815
  42,854
  49,319
  56,199
  63,485
  71,168
  79,241
  87,700
  96,543
  105,770
  115,383
  125,388
  135,793
  146,610
  157,851
  169,532
  181,671
  194,290
  207,411
  221,058
  235,260
  250,046
  265,447
  281,496
Total liabilities, $m
  11,723
  14,579
  17,932
  21,734
  25,989
  30,699
  35,859
  41,464
  47,503
  53,968
  60,848
  68,134
  75,817
  83,890
  92,349
  101,192
  110,419
  120,032
  130,037
  140,442
  151,259
  162,500
  174,181
  186,320
  198,939
  212,060
  225,707
  239,909
  254,695
  270,096
  286,145
Total equity, $m
  9,288
  10,215
  12,565
  15,228
  18,210
  21,510
  25,126
  29,053
  33,285
  37,814
  42,635
  47,740
  53,123
  58,780
  64,707
  70,903
  77,368
  84,104
  91,114
  98,405
  105,984
  113,860
  122,045
  130,551
  139,393
  148,586
  158,149
  168,100
  178,460
  189,251
  200,496
Total liabilities and equity, $m
  21,011
  24,794
  30,497
  36,962
  44,199
  52,209
  60,985
  70,517
  80,788
  91,782
  103,483
  115,874
  128,940
  142,670
  157,056
  172,095
  187,787
  204,136
  221,151
  238,847
  257,243
  276,360
  296,226
  316,871
  338,332
  360,646
  383,856
  408,009
  433,155
  459,347
  486,641
Debt-to-equity ratio
  0.762
  0.970
  1.060
  1.120
  1.170
  1.210
  1.240
  1.270
  1.290
  1.300
  1.320
  1.330
  1.340
  1.350
  1.360
  1.360
  1.370
  1.370
  1.380
  1.380
  1.380
  1.390
  1.390
  1.390
  1.390
  1.400
  1.400
  1.400
  1.400
  1.400
  1.400
Adjusted equity ratio
  0.409
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412
  0.412

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -998
  -3,692
  -4,597
  -5,626
  -6,779
  -8,057
  -9,460
  -10,985
  -12,631
  -14,394
  -16,272
  -18,263
  -20,363
  -22,571
  -24,885
  -27,306
  -29,832
  -32,464
  -35,204
  -38,055
  -41,018
  -44,097
  -47,297
  -50,623
  -54,079
  -57,673
  -61,412
  -65,302
  -69,351
  -73,569
  -77,963
Depreciation, amort., depletion, $m
  2,454
  3,075
  3,782
  4,583
  5,481
  6,474
  7,562
  8,744
  10,018
  11,381
  12,832
  14,369
  15,989
  17,692
  19,476
  21,341
  23,286
  25,314
  27,424
  29,618
  31,899
  34,270
  36,733
  39,293
  41,954
  44,721
  47,600
  50,595
  53,713
  56,961
  60,345
Funds from operations, $m
  891
  -618
  -816
  -1,042
  -1,298
  -1,583
  -1,898
  -2,241
  -2,613
  -3,013
  -3,440
  -3,894
  -4,374
  -4,879
  -5,410
  -5,965
  -6,545
  -7,150
  -7,781
  -8,437
  -9,118
  -9,827
  -10,564
  -11,329
  -12,125
  -12,952
  -13,812
  -14,707
  -15,638
  -16,608
  -17,618
Change in working capital, $m
  -460
  -160
  -184
  -208
  -233
  -258
  -283
  -307
  -331
  -354
  -377
  -399
  -421
  -442
  -463
  -484
  -505
  -527
  -548
  -570
  -592
  -616
  -640
  -665
  -691
  -719
  -748
  -778
  -810
  -844
  -879
Cash from operations, $m
  1,351
  -458
  -632
  -834
  -1,065
  -1,325
  -1,615
  -1,934
  -2,282
  -2,659
  -3,063
  -3,495
  -3,953
  -4,437
  -4,946
  -5,481
  -6,040
  -6,624
  -7,233
  -7,867
  -8,526
  -9,212
  -9,924
  -10,664
  -11,434
  -12,233
  -13,065
  -13,929
  -14,828
  -15,764
  -16,739
Maintenance CAPEX, $m
  0
  -2,460
  -3,075
  -3,782
  -4,583
  -5,481
  -6,474
  -7,562
  -8,744
  -10,018
  -11,381
  -12,832
  -14,369
  -15,989
  -17,692
  -19,476
  -21,341
  -23,286
  -25,314
  -27,424
  -29,618
  -31,899
  -34,270
  -36,733
  -39,293
  -41,954
  -44,721
  -47,600
  -50,595
  -53,713
  -56,961
New CAPEX, $m
  -1,541
  -4,980
  -5,728
  -6,494
  -7,269
  -8,045
  -8,815
  -9,573
  -10,317
  -11,043
  -11,753
  -12,446
  -13,124
  -13,791
  -14,450
  -15,105
  -15,761
  -16,421
  -17,091
  -17,775
  -18,477
  -19,202
  -19,954
  -20,737
  -21,555
  -22,413
  -23,313
  -24,260
  -25,257
  -26,308
  -27,415
Cash from investing activities, $m
  -431
  -7,440
  -8,803
  -10,276
  -11,852
  -13,526
  -15,289
  -17,135
  -19,061
  -21,061
  -23,134
  -25,278
  -27,493
  -29,780
  -32,142
  -34,581
  -37,102
  -39,707
  -42,405
  -45,199
  -48,095
  -51,101
  -54,224
  -57,470
  -60,848
  -64,367
  -68,034
  -71,860
  -75,852
  -80,021
  -84,376
Free cash flow, $m
  920
  -7,898
  -9,435
  -11,110
  -12,918
  -14,851
  -16,904
  -19,070
  -21,343
  -23,720
  -26,197
  -28,773
  -31,446
  -34,217
  -37,088
  -40,062
  -43,141
  -46,331
  -49,637
  -53,065
  -56,621
  -60,312
  -64,148
  -68,135
  -72,283
  -76,601
  -81,099
  -85,789
  -90,680
  -95,785
  -101,115
Issuance/(repayment) of debt, $m
  -587
  2,919
  3,353
  3,802
  4,255
  4,710
  5,160
  5,604
  6,040
  6,465
  6,880
  7,286
  7,683
  8,073
  8,459
  8,843
  9,227
  9,613
  10,005
  10,405
  10,816
  11,241
  11,681
  12,140
  12,619
  13,121
  13,648
  14,202
  14,786
  15,401
  16,049
Issuance/(repurchase) of shares, $m
  0
  5,736
  6,947
  8,289
  9,761
  11,357
  13,076
  14,912
  16,863
  18,924
  21,093
  23,367
  25,746
  28,228
  30,812
  33,501
  36,296
  39,200
  42,215
  45,345
  48,596
  51,973
  55,482
  59,129
  62,921
  66,867
  70,974
  75,253
  79,711
  84,359
  89,209
Cash from financing (excl. dividends), $m  
  -596
  8,655
  10,300
  12,091
  14,016
  16,067
  18,236
  20,516
  22,903
  25,389
  27,973
  30,653
  33,429
  36,301
  39,271
  42,344
  45,523
  48,813
  52,220
  55,750
  59,412
  63,214
  67,163
  71,269
  75,540
  79,988
  84,622
  89,455
  94,497
  99,760
  105,258
Total cash flow (excl. dividends), $m
  324
  758
  866
  981
  1,098
  1,216
  1,332
  1,447
  1,559
  1,669
  1,776
  1,881
  1,983
  2,084
  2,184
  2,283
  2,382
  2,481
  2,583
  2,686
  2,792
  2,902
  3,015
  3,134
  3,257
  3,387
  3,523
  3,666
  3,817
  3,975
  4,143
Retained Cash Flow (-), $m
  1,082
  -5,736
  -6,947
  -8,289
  -9,761
  -11,357
  -13,076
  -14,912
  -16,863
  -18,924
  -21,093
  -23,367
  -25,746
  -28,228
  -30,812
  -33,501
  -36,296
  -39,200
  -42,215
  -45,345
  -48,596
  -51,973
  -55,482
  -59,129
  -62,921
  -66,867
  -70,974
  -75,253
  -79,711
  -84,359
  -89,209
Prev. year cash balance distribution, $m
 
  1,117
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  -3,862
  -6,081
  -7,308
  -8,662
  -10,142
  -11,744
  -13,466
  -15,304
  -17,255
  -19,317
  -21,487
  -23,763
  -26,144
  -28,629
  -31,219
  -33,915
  -36,718
  -39,632
  -42,659
  -45,804
  -49,072
  -52,467
  -55,995
  -59,664
  -63,480
  -67,452
  -71,587
  -75,894
  -80,384
  -85,066
Discount rate, %
 
  6.20
  6.51
  6.84
  7.18
  7.54
  7.91
  8.31
  8.72
  9.16
  9.62
  10.10
  10.60
  11.13
  11.69
  12.28
  12.89
  13.53
  14.21
  14.92
  15.67
  16.45
  17.27
  18.14
  19.04
  20.00
  21.00
  22.05
  23.15
  24.30
  25.52
PV of cash for distribution, $m
 
  -3,636
  -5,361
  -5,993
  -6,565
  -7,052
  -7,436
  -7,702
  -7,838
  -7,840
  -7,711
  -7,457
  -7,090
  -6,627
  -6,089
  -5,497
  -4,875
  -4,244
  -3,625
  -3,037
  -2,493
  -2,004
  -1,576
  -1,211
  -909
  -666
  -475
  -330
  -223
  -146
  -93
Current shareholders' claim on cash, %
  100
  66.7
  45.0
  30.6
  21.0
  14.6
  10.2
  7.2
  5.1
  3.6
  2.6
  1.9
  1.3
  1.0
  0.7
  0.5
  0.4
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Noble Energy, Inc. is an independent energy company. The Company is engaged in crude oil, natural gas and natural gas and natural gas liquids (NGLs) exploration, development, production and acquisition. The Company's segments include: United States, including the onshore DJ Basin, Permian Basin, Eagle Ford Shale, Marcellus Shale and offshore deepwater Gulf of Mexico, as well as the consolidated accounts of Noble Midstream Partners LP (Noble Midstream Partners); Eastern Mediterranean, including offshore Israel and Cyprus; West Africa, including offshore Equatorial Guinea, Cameroon and Gabon, and Other International and Corporate, including new ventures, such as offshore the Falkland Islands, Suriname and Newfoundland. The Company's portfolio of assets is diversified through the United States and international projects and production mix among crude oil, natural gas and NGLs. Its business focuses on both the United States unconventional basins and certain global conventional basins.

FINANCIAL RATIOS  of  Noble Energy (NBL)

Valuation Ratios
P/E Ratio -11.6
Price to Sales 3.3
Price to Book 1.2
Price to Tangible Book
Price to Cash Flow 8.6
Price to Free Cash Flow -60.8
Growth Rates
Sales Growth Rate 9.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -48.3%
Cap. Spend. - 3 Yr. Gr. Rate -17.1%
Financial Strength
Quick Ratio 19
Current Ratio 0
LT Debt to Equity 75.5%
Total Debt to Equity 76.2%
Interest Coverage -4
Management Effectiveness
Return On Assets -3.6%
Ret/ On Assets - 3 Yr. Avg. -2.1%
Return On Total Capital -5.7%
Ret/ On T. Cap. - 3 Yr. Avg. -3.9%
Return On Equity -10.2%
Return On Equity - 3 Yr. Avg. -7.1%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 86.7%
Gross Margin - 3 Yr. Avg. 91.5%
EBITDA Margin 28.9%
EBITDA Margin - 3 Yr. Avg. 35.3%
Operating Margin -37.1%
Oper. Margin - 3 Yr. Avg. -32.3%
Pre-Tax Margin -50.8%
Pre-Tax Margin - 3 Yr. Avg. -29%
Net Profit Margin -28.6%
Net Profit Margin - 3 Yr. Avg. -27.2%
Effective Tax Rate 44.4%
Eff/ Tax Rate - 3 Yr. Avg. 21.1%
Payout Ratio -17.2%

NBL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NBL stock intrinsic value calculation we used $3491 million for the last fiscal year's total revenue generated by Noble Energy. The default revenue input number comes from 2016 income statement of Noble Energy. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our NBL stock valuation model: a) initial revenue growth rate of 25% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 6.2%, whose default value for NBL is calculated based on our internal credit rating of Noble Energy, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Noble Energy.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of NBL stock the variable cost ratio is equal to 177.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for NBL stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.3% for Noble Energy.

Corporate tax rate of 27% is the nominal tax rate for Noble Energy. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the NBL stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for NBL are equal to 570.7%.

Life of production assets of 8.1 years is the average useful life of capital assets used in Noble Energy operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for NBL is equal to -18.3%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $9288 million for Noble Energy - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 486.671 million for Noble Energy is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Noble Energy at the current share price and the inputted number of shares is $13.1 billion.

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COMPANY NEWS

▶ [$$] Noble Energy Extends Deadline for Sale of Marcellus Venture Stake   [Dec-08-17 09:36PM  The Wall Street Journal]
▶ Chesapeakes Implied Volatility: Stock Price Range Forecast   [Dec-05-17 03:00PM  Market Realist]
▶ Weekly Top Insider Buys Highlight for the Week of Dec. 1   [Dec-03-17 10:54AM  GuruFocus.com]
▶ Noble Energy selling more assets in $340M deal   [Nov-27-17 09:10AM  American City Business Journals]
▶ Chesapeake Energys Stock Price Range Forecast   [03:10PM  Market Realist]
▶ Noble Energy, SRC Energy make a $608M deal for 30,200 DJ Basin acres   [Nov-08-17 07:15PM  American City Business Journals]
▶ IIROC Trading Resumption - AEP NBL.P LUM   [04:56PM  PR Newswire]
▶ Did Chesapeakes 3Q17 Revenue and Earnings Meet Expectations?   [Nov-06-17 07:41AM  Market Realist]
▶ Noble Energys Implied Volatility: Price Range Forecast   [Nov-03-17 07:31AM  Market Realist]
▶ Noble Energy: Wall Street Analysts Recommendations   [Nov-02-17 10:36AM  Market Realist]
▶ Cabot Oil & Gass 3Q17 Earnings and Revenue Missed Estimates   [Oct-31-17 01:26PM  Market Realist]
▶ Noble reports 3Q loss   [04:39PM  Associated Press]
▶ Chesapeakes Implied Volatility: What We Can Infer from It   [Oct-27-17 10:42AM  Market Realist]
▶ Chesapeake Energys Stock Price Range Forecast   [Oct-24-17 01:37PM  Market Realist]
▶ Noble Energy Declares Quarterly Dividend   [07:00AM  GlobeNewswire]
▶ Behind Noble Energys Stock Performance This Year   [Oct-19-17 02:05PM  Market Realist]
▶ Inside Noble Energys Production Goal for 2017   [12:37PM  Market Realist]
▶ Noble Energys 3Q17 Earnings: What to Expect   [10:59AM  Market Realist]
▶ Noble Midstream Partners Leads in Total Returns among MLPs   [Oct-18-17 09:13AM  Market Realist]
▶ Chesapeake Energys Stock Price Range Forecast   [Oct-17-17 12:35PM  Market Realist]
▶ Forbes names 11 Houston energy companies among 'World's Best Employers'   [07:45AM  American City Business Journals]
▶ Chesapeake Energy Stock: Whats the Short Interest Trend?   [Oct-11-17 07:39AM  Market Realist]
▶ Behind Noble Midstream Partners Top 7 MLP Position   [Oct-03-17 01:37PM  Market Realist]
▶ Analyzing Chesapeake Energys Implied Volatility   [Sep-20-17 01:18PM  Market Realist]
▶ Cabot Oil & Gass Stock Price Range: Whats the Forecast?   [Sep-15-17 12:29PM  Market Realist]
▶ Tellurian Led the Upstream Gainers Last Week   [Sep-12-17 08:09AM  Market Realist]
▶ Why August Was a Bad Month for Oil Drillers   [Sep-11-17 04:05PM  Motley Fool]
▶ Chesapeake Energys Implied Volatility: What Can We Forecast?   [Sep-08-17 09:36AM  Market Realist]
▶ What Are the Trends in EQTs Implied Volatility?   [Sep-06-17 09:05AM  Market Realist]
▶ How EQTs Earnings and Revenues Have Been Trending   [Sep-04-17 09:06AM  Market Realist]
▶ Noble Energy to Present at Upcoming Energy Conference   [Aug-31-17 08:30AM  GlobeNewswire]
▶ How Chesapeake Energys Implied Volatility Has Changed   [Aug-28-17 09:07AM  Market Realist]
▶ Where Are Natural Gas Prices Headed?   [02:06PM  Market Realist]
Financial statements of NBL
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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